{"id":56525,"date":"2020-03-04T15:01:49","date_gmt":"2020-03-04T09:31:49","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?page_id=56525"},"modified":"2020-03-04T15:01:51","modified_gmt":"2020-03-04T09:31:51","slug":"answered-promoting-and-strengthening-the-micro-small-and-medium-enterprises-msme-sector-can-help-in-achieving-inclusive-growth-comment-2","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-promoting-and-strengthening-the-micro-small-and-medium-enterprises-msme-sector-can-help-in-achieving-inclusive-growth-comment-2\/","title":{"rendered":"[Answered] Promoting and strengthening the Micro, Small and Medium Enterprises (MSME) sector can help in achieving inclusive growth. Comment."},"content":{"rendered":"\n
\n Demand of the question<\/strong>\n Introduction.\n <\/strong>Contextual introduction.\n Body.\n <\/strong>Discuss how MSME sector can help in achieving\n inclusive growth? Mention challenges faced by MSMEs in India.\n Conclusion.\n <\/strong>Way forward.\n <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The Micro, Small and Medium Enterprise\nsector is crucial to India\u2019s economy. There are 30 million enterprises in\nvarious industries, employing 69 million people. Nationwide, Micro, Small and\nMedium enterprises (MSMEs) have been acknowledged as the engine of economic\nacceleration and for promoting progress. The sector is critical for employment\ngeneration and for the development of Indian economy by increasing the standard\nof living of the people. In this way the MSMEs play a significant role in\ninclusive growth of Indian economy.<\/p>\n\n\n\n

How\ncan the MSME sector help in achieving inclusive growth?<\/strong><\/p>\n\n\n\n

  1. Employment: <\/strong>As MSMEs are usually labour-intensive, they have the\nability to create more jobs. MSME sector is the most useful vehicle for\ninclusive growth in India due to its inherent nature of large scale employment\ncreation in the shortest possible time, especially to people belonging to\nweaker sections of the society. <\/li>
  2. Rural\nentrepreneurship:<\/strong> According to\n2011 Census 68.84% people are living in rural areas of India. People in rural\nareas suffer with unemployment, poor infrastructure facilities which may be\nsolved with the development of the rural entrepreneurs. There is a lot of scope for rural\nentrepreneurship in MSMEs sector economy which plays a vital role in providing\nemployment and income for the poor and unemployed in rural areas.<\/li>
  3. Non-agricultural livelihood: <\/strong>Indian MSME sector offers maximum opportunities\nfor both self-employment and wage-employment outside the agricultural sector\nand contributes in constructing an inclusive and sustainable society.The rural non-farm sector in the form\nof rural SMEs absorb those released from agriculture but not absorbed in the\nurban industries.<\/li>
  4. Female\nparticipation: <\/strong>20% of Every\n1000 MSMEs in India are women Owned. MSMEs provide a\nplatform for female participation, especially being informal in nature. MSMEs act as an imperative\ninstrument for the development of women and realize the goals of economic\ngrowth and development of the nation.<\/li>
  5. Better pays: <\/strong>In addition, evidence suggests that small enterprises\nprovide better stability, higher pay and better benefits to their employees\nthan large enterprises and informal firms especially to unskilled labour force.\nThis enables poor to earn\nmore and save more for their welfare.<\/li>
  6. Cheap products: <\/strong>MSMEs comprise the majority of firms which have much deeper\nand market penetration than foreign firms. Local SMEs are often the principal\nprovider of goods and services in lower and middle income communities. Thus,\nthey provide affordable products to poor and middle income families leading to\nmore savings.<\/li>
  7. Reduce inequalities:<\/strong> MSMEs help in developing infrastructural facilities like\nroads, power, bridges etc. It reduces the gaps and disparities in income\nbetween rural and urban areas. Rural MSMEs can avoid the migration of people\nfrom rural to urban areas in search of jobs.<\/li><\/ol>\n\n\n\n

    Challenges\nfaced by MSMEs in India:<\/strong><\/p>\n\n\n\n

    1. Problem of Finance: <\/strong>An important problem faced by micro and small\nenterprises in the country is that of finance. Most banks are reluctant to lend\nto MSMEs because from the perspective of bankers, inexperience of these\nenterprises, poor financials, lack of collaterals and infrastructure.<\/li>
    2. Problem of Raw Material: <\/strong>A major problem that the micro and small\nenterprises have to contend with is the procurement of raw material.\nProcurement of raw material at a competitive cost and shortage of raw materials\nis a common problem. The small units that use imported raw material face raw\nmaterial problems with more\nseverity mainly due to difficulty in obtaining raw material either on account\nof the foreign exchange crisis or regulator delays. <\/li>
    3. Access to modern Technology<\/strong>: The lack of technological know-how and financial\nconstraints limits the access to modern technology and consequently the\ntechnological adoption remains low. <\/li>
    4. Government policy\/infrastructure related\nchallenges:<\/strong> MSMEs face\nbureaucratic hurdles and red Tapism. Delay in getting power connection, water connection,\npermission of concerned authorities to discharge effluents, etc. are some of\nthe issues faced. <\/li>
    5. Marketing related challenges:<\/strong> Lack of entrepreneurial, managerial and\nmarketing skills and lack of professionally managed top management along with\nineffective marketing strategy is a major hurdle in success of MSMEs.\nNon-exposure to best management practices in manufacturing, marketing,\ndistribution and branding and lack of adequate information hinders their\nproductivity.<\/li>
    6. Labour related challenges:<\/strong> Lack of skilled manpower for manufacturing,\nservices, marketing, etc. is a big issue for MSMEs. Further, multiplicity of\nlabour laws and complicated procedures associated with compliance of such laws\nimpact MSMEs ability to grow. <\/li><\/ol>\n\n\n\n

      Way\nforward to strengthen the Micro, Small and Medium Enterprises (MSME) sector:<\/strong><\/p>\n\n\n\n

      1. Access to credit:<\/strong> Government of India and banks should design plans and\nmeasures to widen easy, hassle-free access to credit. Ministry of MSME\nimplemented Credit Guarantee Fund Scheme for providing financial assistance to\nMSMEs. Government must ensure that banks should enable timely credit to MSMEs. The establishment of\nthe MUDRA (Micro Units Development & Refinance Agency Ltd.) bank under the\nPradhan Mantri MUDRA Yojana has been a major initiative.<\/li>
      2. Coherent policy and regulatory frameworks:<\/strong> Coherent regulatory frameworks can provide an\nenabling environment to foster MSME development. Barriers to entry, including\ntechnical regulations, compliance with Environment, Health and Safety (EHS)\nstandards, labour laws and regulations need to be addressed.<\/li>
      3. Infrastructure: <\/strong>Government should provide enhanced development and upgrade existing rail & road network\nand other infrastructure facilities in less developed and rural areas to boost\ngrowth and development of MSMEs.<\/li>
      4. Human capital: <\/strong>Skill development and imparting training to MSME workers is\na crucial step to increase the productivity of the sector. The government\nshould emphasise predominantly on skill development and training programs.\nSkill India, Startup India are important initiatives in this direction.<\/li>
      5. Technological know-how: <\/strong>There should proper research and development in\nrespect of innovative methods\nof production and service rendering. Further, the government should promote and\nsubsidise the technical know-how to Micro and small enterprises.<\/li><\/ol>\n\n\n\n

        Therefore, while emphasizing the crucial\nrole of MSMEs in creating employment, it could be useful to highlight their\npotential as decent jobs providers. This means not only formulating policies at\nenterprise level for improving human capital, efficiency and productivity of\nMSMEs, but also launching structural transformation that provide a regulatory\nframework conducive to their growth.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Demand of the question Introduction. Contextual introduction. Body. Discuss how MSME sector can help in achieving inclusive growth? Mention challenges faced by MSMEs in India. Conclusion. Way forward. The Micro, Small and Medium Enterprise sector is crucial to India\u2019s economy. There are 30 million enterprises in various industries, employing 69 million people. Nationwide, Micro, Small… Continue reading [Answered] Promoting and strengthening the Micro, Small and Medium Enterprises (MSME) sector can help in achieving inclusive growth. Comment.<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-56525","page","type-page","status-publish","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/56525","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=56525"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/56525\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=56525"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}